- Fed needs to balance inflation and jobs goals going forward
- There's a risk tariffs could cause a persistent inflation rise
- Expects inflation to ebb back to 2% by the second half of 2026
- Jobs market break even is between 30-80K per month
- Uncertainty lifting for economy, fiscal policy may add stimulus
- Sees modest GDP growth this year before returning to trend in 2026
- Sees job market holding near full employment
- Expects job market cooling with downside risks to labor sector
- Expects tariff inflation impact to fade eventually
- Tariffs will work through economy over 2-3 quarters
He is incrementally less hawkish and outlines it here:
"What I've been doing over the last two months is I've been revising my assessment of downside risks to the labor markets slightly higher, as I've seen some deterioration insome of the underlying full employment numbers. And I've been revising my assessment of the risk of persistent above target inflation slightly lower, in part because the pass through so far of tariffs on inflation has been low."
What I worry about with tariffs is that we get 2-3 quarters of inflation on this round of tariffs and then Trump blows on NAFTA next year and that creates a fresh inflation shock. At that point does it become persistent and boost inflation expectations?
More:
- Anecdotal information is very important
- Fed structure helps protect policy decisions from politics
